Bitcoin and Ethereum spot exchange-traded funds in the U.S. saw a combined net outflow of $797 million on Tuesday as institutional investors repositioned holdings during a market meltdown.
According to data from SoSoValue, spot bitcoin ETFs recorded a net outflow of $577.74 million, which is the largest single-day outflow since Aug. 1. Fidelity's FBTC saw $356.6 million exit the fund, Ark & 21Shares' ARKB saw $128 million in outflows, and Grayscale's GBTC saw $48.9 million worth of outflows.
A total of seven BTC funds reported negative flows on Tuesday. This extends the funds' outflow streak to five days, during which the ETFs saw $1.9 billion in outflows.
Spot Ethereum ETFs posted net outflows of $219.37 million yesterday, led by $111 million in net outflows from BlackRock's ETHA. Funds from Grayscale and Fidelity also reported outflows. Spot Solana ETFs reported net inflows of $14.83 million, posting the smallest amount of daily net inflows since their debut last week.
Institutional recalibration
"The fifth straight day of outflows marks a decisive shift in institutional positioning," said Rachael Lucas, crypto analyst at BTC Markets. "This isn't just a pause; it's a recalibration."
Lucas explained that institutional selling is a tactical move driven by risk management after assessing the macroeconomic environment.
Last month's hawkish message from U.S. Federal Reserve Chair Jerome Powell crushed hopes for a guaranteed December interest rate cut, which pushed up the U.S. dollar index (DXY) above 100 to a relatively strong dollar.
"Risk assets are repricing, and crypto, still tightly correlated to tech, is feeling the heat," said Lucas. "The AI trade looks overextended, and if valuations in that sector unwind, it could spill into crypto via the Nasdaq correlation."
This put the crypto fear and greed index fell to 21 on Tuesday, down from 42 the previous day, placing it in the "extreme fear" territory. This fear in the market is being amplified by ETF flows, Derek Lim, research lead at Caladan, told The Block.
Lim shared the view that Powell's comment strengthened the dollar and triggered a risk-off sentiment, adding that the U.S. government shutdown is further contributing to macroeconomic uncertainty.
Still bullish
However, Lim of Caladan maintained that the bullish structure for the crypto market remains intact.
"A delayed rate cut would be short term negative for risk assets, but the overall macro conditions have not changed significantly — we're still moving towards the end of QT and rate cuts are coming sooner or later," said Lim. "At current levels, the bullish structure still holds, even as sentiment seems to be at rock bottom. Of course, once again, there is going to be a lot of volatility."
Lim added that the 21.5% drop in bitcion's price from $125,000 to $99,000 is relatively mild compared to the 31% drop in the first quarter of the year amid concerns surrounding the "Liberation Day" tariffs.
"If outflows persist, expect further price pressure — liquidity thins, volatility spikes, and technical levels come into play," Lucas told The Block. "Re-accumulation will require a shift in macro tone or a new narrative. Rate cuts, a weaker USD, or a resurgence in real-world asset tokenization could reignite interest."
According to The Block's crypto price page, bitcoin is down 2.7% in the past 24 hours to trade at $101,731, while ether dropped 4.7% to change hands at $3,326.
